1. A U.S. resident (the type the actually lives in the United States) is free to run a business incorporated in the United States and NOT be subject to the U.S. Transition Tax and GILTI rules; but

2. Certain Canadian residents (the type that actually lives in Canada that the USA claims to be a U.S. citizen) is NOT free to run a business incorporated in Canada without being subject to the U.S. Transition Tax and GILTI rules.

In other words, the United States of America (that great Citadel of Freedom of Justice) is in effect imposing a separate and more punitive tax system on Canadian residents than on U.S. residents.

In Canada, Canadian Controlled Private Corporations play the social role of being private pension plans.

Bottom line is this: The United States is (via the Transition Tax) attempting to confiscate the pensions of Canadian residents as explained in this recent article at Tax Connections:

U.S. Extra-territorial taxation is a direct attack on Canada’s Sovereignty …

This may not affect you personally but it is an attack on Canada. I suggest that this is an important cause and I suggest that consider donating to it! Thanks to Monte Silver for taking this initiative!

A person can move to American and run a business in America. But a "US Person"can't leave America and run a business outside of America! Help Monte Silver's humanitarian effort: "The @USTransitionTax Fundraiser" – "US small business for tax fairness" https://t.co/ivw0OQRsLh?

Support Canadian Sovereignty! Donate to Monte Silver’s “Transition Tax Fundraiser!”

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Update from Monte Nov 14, 2018

Below is a summary of the advocacy effort since June 2018, and a description of the road ahead. For the first time since we began this advocacy, donations are required to enable us to proceed. I am also making myself available until December 15 to assist on Transition tax matters, in exchange for donation to the cause.

This email impacts Americans who have interests in non-U.S. corporations. Unless our tax advocacy is successful,

1. Many American small businesses have until December 15 to file their 2017 U.S. tax return with the Transition tax attachments.
2. Many American small businesses have paid some Transition tax and will pay more in the coming 8 years.
3. A huge number of American small businesses must comply with GILTI every year from 2018 onward.
The first part of this email discusses developments since June till today. The second part focuses on next steps.

Part 1 – from June 4 till the present

On June 4, due to our efforts, the Treasury granted small businesses with less than $1M in transition tax liability a one year extension to make the first payment of the tax. Since that time my focus has been to secure small businesses – both U.S. and foreign based – permanent relief from the two taxes. As set forth below, the attempt to resolve the exposure of American small businesses (abroad and in the US) to the Transition tax and GILTI by friendly dialogue appears to have fallen on deaf ears.

Congress-facing activity: In June 2018 I met with senior staff of 37 members of the Senate Finance Committee and House Ways and Means, and engaged in extensive follow up. One Senator’s office was kind enough to produce a draft bill to exempt small businesses from the Transition tax. However, that office made clear that there was no support for the relief among any members of the Senate Finance Committee he talked to. In my opinion, Congress will not grant small businesses any relief from these taxes, even in the lame duck session.

Treasury-facing activity: In August 2018, Treasury issued proposed regulations for the Transition tax. In October 2018, Treasury issued proposed regulations for the GILTI tax. After investing hundreds of hours reviewing these proposed regulations, researching various procedural laws and talking to relevant US legal experts, I conclude as follows: in issuing these proposed regulations, Treasury seriously violated at least 3 federal procedural laws – (i) the Regulatory Flexibility Act (RFA), which expressly gives Treasury the authority to exempt small businesses from the Transition & GILTI taxes; (ii) the American Procedure Act (APA) and the Paperwork Reduction Act (PRA). These violations give small businesses the specific authority to sue Treasury in a relatively expedited proceeding, and the courts have the specific power under these laws to provide small businesses effective relief.

Since August, I have repeatedly sent Treasury Secretary Mnuchin and senior officials at Treasury/IRS and other agencies well-thought-out analysis citing clear-cut Congressional reports, legislative history and case law all supporting my claims. I asked that a compromise be reached in order to put this matter to rest. But Treasury simply ignored my analysis, or at best simply concluded without any explanation that these laws did not apply to the proposed regulations, At this point, and based on written and oral feedback from senior government officials, I have concluded that Treasury will not grant small businesses any exemption in the proposed regs.

Part 2 – Next steps

There are five options, which can all take place in parallel. The first four involve me helping individual small businesses lawfully avoid Transition/GILTI taxes. The fifth option, which will seriously enhance options 2-4, involves suing the Treasury for violating three federal laws and getting the court to give us relief.

1. Very small businesses with little Transition tax liability that have yet to file 2017 returns: Until now, on a pro-bono basis I have helped many people who needed to file their Transition tax returns but did not know how to do so. I will continue to do so until December 15, in exchange for an agreeable donation to the cause.
2. Larger businesses with above average Transition tax liability that have yet to file 2017 returns: Based on my analysis of the law and facts, as confirmed by experts, I can issue a legal opinion that reasonably supports the position that the taxpayer has no obligation to file any Transition tax filing on or before December 15, 2018, or make any Transition tax payments in the future.*
3. Larger businesses that have already filed 2017 returns and made Transition tax payments. Here, I can issue a legal opinion that reasonably supports the position that (i) the taxpayer has no obligation to pay any more Transition tax payments, (ii) the taxpayer can amend its 2017 return without the Transition tax filings, or (ii) allows the taxpayer to file for a refund of Transition taxes paid. *
4. All businesses with GILTI filing obligations and tax liability from 2018 moving forward. Same as options 1-3 with regard to GILTI filing obligations and tax liability *
5. Litigation. A lawsuit against Treasury/IRS to get the court to provide small businesses relief from these two taxes. I have every intention to immediately file this lawsuit and aggressively fight this in court. Independent legal experts and I strongly believe we will win, otherwise I wouldn’t even consider this option. And the laws provide for a relatively expedited legal proceedings. I have identified a highly experienced DC-based boutique law firm which has done battle with Treasury and won. The firm likes the case. ITS ALL ABOUT THE DONATIONS. Costs of litigation can be kept low by me doing part of the work at reduced rates (yet no longer completely pro-bono given the time involved).

* As to options 2-4 – please contact me for details. Such an opinion must be discussed in detail before any decision is made, and will be impacted by the final regs which will be out shortly. In any case, portion of the fees generated from these three options will help fund litigation is sufficient donations are generated.

As to option 5, litigation, this will not happen unless you generously donate to the cause. Donations can be made via(i) www.gofundme.com/small-businesses-for-tax-fairness
(ii) Paypal at montetal2@yahoo.com, or
(iii) via a wire to a bank account.
All donations will be kept confidential. Furthermore, if you wish to be named as a party to this litigation, let me know.

Together we have achieved two wins from Treasury and brought broad awareness to our cause. I have every intention of continuing the battle and winning. Together (and only together) we can do it.
Monte

A series of information sessions (some formal presentations and some informal discussions); for information concerning the content of the programs please see here.

John Richardson is a Toronto citizenship lawyer, the co-chairman of the Alliance for the Defence of Canadian Sovereignty as well as the Alliance for the Defeat of Citizenship Taxation. He is a member of the ACA Taxation Advisory Panel. He holds the degrees of B.A., LL.B., and J.D. He is a member of the Massachusetts, New York and Ontario bars. His law practice focuses on “Solving the problems of U.S. citizenship” including relinquishing and the “Exit Tax”. He gives programs for expats (and Green Card holders) all across Canada and Europe. He writes extensively at citizenshipsolutions.ca.

Karen Alpert founded the website Let’s Fix the Australia/US Tax Treaty and its associated Facebook group. The purpose of the group is to lobby and educate the Australian government regarding the impact of extraterritorial US laws on Australian citizens and residents and the cost to Australia of surrendering its sovereignty in these matters. Karen has a Ph.D. (UQ, Finance) and lectures in Finance at the University of Queensland.

Auckland, New Zealand – October 31

Sydney, Australia – November 1

Thursday, November 17:00 – 9:00 p.m.The Rex Centre – Baroda Room
58A Macleay Street
Entrance near Baroda Street
Potts Point NSW 2011MAPCost: Free, but preregistration is required for all sessions except the October 25 session in Brisbane (where you can just appear)Registration: please send an email to: citizenshipsessions at citizenshipsolutions.ca or nobledreamer16 at gmail.com

Here is the Memorandum of Argument of our Plaintiffs (Gwen and Kazia) for our FATCA IGA legislation lawsuit that was submitted on October 3, 2018 to Canada’s Federal Court. [Note that text is limited to 30 pages.]

The gist of our argument (page 12) is that the FATCA IGA legislation is inapplicable to Provincially regulated institutions and violates Sections 7, 8, and 15 of Canada’s Charter of Rights.

The word “sovereignty” is used many times in the document.

Some Excerpts:

— “Section 8 of the Charter states: Everyone has the right to be secure against unreasonable search or seizure…The Impugned Provisions authorize both a search and a seizure…The plaintiffs and other reasonable hypothetical individuals have a reasonable expectation of privacy in their Accountholder Information…Canada pleads that because the plaintiffs and other US Persons have pre-existing obligations to report certain information to the IRS under US law, their privacy interest in that information is minimal…Canada cannot demonstrate that the searches and seizures authorized by Impugned Provisions are reasonable because (a) they are warrantless and lack any judicial supervision of any kind, (b) it is impossible to test their reliability in achieving their objective, and (c) they almost certainly capture an inordinate number of individuals who have no US tax and reporting obligations…”

— “The state objective underlying the Impugned Provisions is to assist the United States in implementing FATCA and finding US tax evaders and cheats.57 This is not an important Canadian objective.”

— “Finally, the court should recognize a novel principle of fundamental justice that Canada will not deny its citizens the protection of Canadian sovereignty…the principle of non-intervention between states is a cornerstone of the international order and intrinsically connected to state sovereignty;88 it is undoubtedly considered by all Canadians to be fundamental to their notion of justice that Canada will not expose them to enforcement of another state’s laws…”

I just got off the phone with someone who has just received a letter from the IRS stating that:

1. He had a “seriously delinquent” tax debt; and

2. That notice of the “seriously delinquent” tax debt was being forwarded to the State Department.

(In 2016 I did a presentation on this topic just a few months after the law came into force. You may view the presentation here.)

It is clear that the letters from the IRS have started to go out. The purpose of this post is to explain in simple terms what this means for Americans abroad.

To put it simply:

1. If you have received the notice and you do NOT have a current U.S. passport then:

The State Department cannot issue you a passport.

2. If you have received the notice and you DO have a current U.S. passport then:

The State Department may revoke your passport but is not required to revoke your passport.

For most Americans abroad (who certainly have a valid U.S. passport unless they are dual citizens) receipt of the letter does NOT mean that they will lose their existing U.S. passport.

Like all aspects of living as a U.S. citizen abroad, this issue will be governed by both the IRS and by the State Department.

It began with Sec. 3201 of the FAST Act (which naturally is a revenue offset provision and one of the final gifts from the Obama administration) …

Like most of life as a U.S. citizen, it all starts with the IRS …

Internal Revenue Code Sec. 7345 provides the mechanism to certify the “seriously delinquent tax debt” and then forward notice of the debt to the State Department. The relevant language is:

If the Secretary receives certification by the Commissioner of Internal Revenue that an individual has a seriously delinquent tax debt, the Secretary shall transmit such certification to the Secretary of State for action with respect to denial, revocation, or limitation of a passport pursuant to section 32101 of the FAST Act.

Passports and Seriously Delinquent Tax Debt If you have been certified to the Department of State by the Secretary of the Treasury as having a seriously delinquent tax debt, you cannot be issued a U.S. passport and your current U.S. passport may be revoked.

If you are overseas you may be eligible for a limited passport good for direct return to the United States.

We would suggest that if you have seriously delinquent tax debt, you contact the IRS to resolve your debt before applying for a passport. If you do not resolve your tax issues before applying for a passport, your application will be delayed or denied.

If you have seriously delinquent tax debt and have already applied for a new U.S. passport, we cannot issue a new passport to you until you have resolved your tax issues with the Internal Revenue Service (IRS).

For more information on seriously delinquent tax debt, see Revocation or Denial of Passport in Case of Certain Unpaid Taxes on the Internal Revenue Service (IRS) website.

So, where in the legislation and regulations does all this come from?

Denial: Denial is mandatory when one applies for renewal or for a new passport.

§ 51.60 Denial and restriction of passports.
(a) The Department may not issue a passport, except a passport for direct return to the United States, in any case in which the Department determines or is informed by competent authority that:

(3) The applicant is certified by the Secretary of the Treasury as having a seriously delinquent tax debt as described in 26 U.S.C. 7345.

Legislation that its proponents say would significantly improve the lot of American expatriates, many of whom have been left reeling by the Trump tax reforms introduced at the end of last year, will be introduced in Congress before the end of the month.

This was the message delivered to a London audience of around 80 mainly expatriate Americans last week by Republican Overseas global chief executive Solomon Yue, (pictured above, far left, and below), and again a few days later to an also mainly expat audience in Paris.

Today Yue is due to bring his message to expats in Frankfurt, with similar events scheduled for Berlin and Rome over the next few days.

Yue’s appearances were his latest on a global whistle-stop tour of key foreign business centers around the world that aims to rally support among – and ideally as well, the active involvement of – American citizens living abroad for legislative changes in the way their country currently taxes them, in the run-up to the midterm elections in November.Continue reading Legislation to help American expats imminent, London audience told

Americans against the Repatriation/GILTI taxes – within striking distance of winning and you can help! And what to do with the October 15 filing deadline?

Hi Fellow Americans,

On August 1, 2018, the Treasury issued proposed regulations that interpret the Repatriation tax law – a 250 page very complicated document. I discovered that in issuing the document, Treasury seriously violated numerous Federal laws and procedures. This gives us tremendous leverage in negotiating for an exemption from the Repatriation & GILTI laws. It is not unreasonable to expect that this battle may be won by December 15, 2018. As you many have an October 15, 2018 filing deadline, I attach a relevant portion of an IRS publication stating that you may be able to extend the filing date until December 15, 2018. I suggest that you discuss this with your US CPA specialist to see if this applies to you.

What can you do to help win the battle? Easy! We need impacted Americans abroad and in the US to send in a few short paragraphs (as outlined below) – by October 7! See below for instructions. If you or people you know are impacted by these laws, lets take care of business!

If you want to remain 100% anonymous, send the comment to me and I will submit it in an anonymous batch with others. To see other comments, including my own, click “Open Docket Folder” on the above link.

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Template comment

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Subject: Comment on the proposed 965/962 rules

To the US Treasury:

I am a U.S. Person with an interest in a small business. As a result of the Repatriation tax, and now these Proposed Rules, 2018 has, and the foreseeable future will continue to be, a nightmare for me, my business and my family.

I am unable to understand the 250-page document at all. My comment is only limited to two issues:

(i)The 5-hour estimate you state that it will take me to comply with this proposed rule in totally unrealistic, and
(ii)The Repatriation tax and this proposed regulation have and will continue to devastate my small business.

Issue 1: Countless hours I have spent and still have to spend trying to deal with the Repatriation tax.

PUT YOUR OWN EXPERIENCE HERE. In one or two paragraphs, detail all the time you have had to spend on the Repatriation tax. Include everything, from initially reading about the tax and talking to friends, to contacting your US and non-CPA CPA, to doing more research on what the tax is and means to you, how to comply, contacting your Congresspeople to complain and demand action, , to gathering documents and tax information, to joining groups and forums to discuss this matter and learn what to do. If your current CPA is not sufficiently knowledgeable about this tax and you had to speak to other tax professionals and pay then, state that. Put an estimate as to the number of hours you have spent on the Repatriation tax and what you have no idea how many hours it will take for you to understand the comply with the 250 page proposed regulations

Issue 2: How the Repatriation tax has devastated my small business.

PUT YOUR OWN EXPERIENCE HERE. In one or two paragraphs, state things like:

how the cost of compliance is so significant that it will threaten the existence of your business. The cost can be

(i) money – paying tax professionals, taking money needed for the business out of the business to pay the tax.

(ii) Time wasted on this and how that impacts your business. Add that this cost does not include the cost of future compliance for the proposed regulations which you cannot even begin to estimate

how you are unable to compete with non-us businesses as they do not have to comply

how you do not have the money needed to pay the tax and will need to take out loans, liquidate an asset, or take out pension money at a huge penalty

Taking money out of the company to pay this tax is harmful to the growth of your business

if you are making the 8-year payment plan or the 962 election, this rule will impact you for years to come

you have no idea whether the proposed rules mean that you have to amend returns, which will double the cost of compliance and headache.

as a result of the significant impact on business, you or others you know have debated whether to simply refuse to comply and become a tax evader

Non-Americans do not want to co-found businesses or have you as an investor, given the headache of Repatriation/GILTI taxes involved.

Based on the above, I respectfully request that Americans with small businesses be exempt from the 965 tax.